UK: Household borrowing a key reason to tread carefully - ING

According to James Smith, Developed Markets Economist at ING, consumer spending has been on a rollercoaster ride for UK since Brexit - surging into the end of 2016 before coming to a standstill in the first half of this year.

Key Quotes

“There's been one constant through all of it: borrowing. Unsecured lending, fuelled in no small part by car financing, has continued to rise at a near-10% rate and has underpinned spending as real incomes have fallen.”

“This a major consideration when hiking interest rates. A survey by the Bank of England at the end of 2016 found that 40% of variable/tracker mortgage holders would need to take "some kind of action to find extra money" if interest rates rose by 1% from current levels. With consumer spending already fragile, the Bank will be keen to tread carefully as it begins hiking rates.”